We have entered a period of intense speculation about the composition of the incoming administration’s cabinet. One of the rumored choices is especially intriguing: Janet Yellen, former chair of the Federal Reserve Board (2014-18) may be asked to served as the next Secretary of the Treasury.
The Federal Reserve is the US central bank. Precisely because money supply and banking supervision are such politically sensitive questions, the Fed has a carefully guarded independence of the US Treasury. But the heads of the two institutions, the chair of the Fed and the Secretary of the Treasury, do have to work together in times of crisis, and ought to have a good collegial relationship at all times. So the appointment of Yellen to the latter post seems natural.
In February 2019 (when she was not in any public position), she told an interviewer that she did not believe President Trump understood the basics of economic policy. “And when I continually hear focus by the president and some of his advisers on remedying bilateral trade deficits with other trade partners,” she added, “I think almost any economist would tell you that there’s no real meaning to bilateral trade deficits, and it’s not an appropriate objective of policy.”
The Thing to Know:
The Biden administration’s Secretary of the Treasury will likely be involved in some of the most complicated and contentious decisions the administration will have to face next year, including the creation of stimulus/relief measures for those families and businesses hard hit by the economic consequences of the pandemic.